Posted by Kristine-CA on October 21, 2003 at 15:52:15:
Nate: thanks for your suggestion. It is possible that I might qualify for such a loan in the not too distant future. And it is definitely time to buy something, maybe anything. We have very little new construction which is why the most basic little 2BDR houses in the older neighborhoods sell for for 500K. Way too much demand and no housing inventory. Thanks again for your suggestion. Sincerely, Kristine
Looking for a house…for me. - Posted by Kristine-CA
Posted by Kristine-CA on October 20, 2003 at 23:02:43:
Greetings all. As some of you know, I’ve been buying and re-selling for a year and a half now. I haven’t kept anything except some vacant land. And some adverse possession properties. But that’s another story.
Since I do deals in an area that is so different from where I live (cheaper), I don’t have the same perspective about finding a deal here. In fact, I have no perspective at all. I’m looking for creative, out-side the box ideas for getting us a house here in Santa Barbara or surrounding areas. There is virtually nothing under $500K. Mobile homes in parks are anywhere form 150-250K. There are parks with trailers from the 1960s that sometimes sell for $100K. I’m not that picky. The four of us live in a 1BDR apt. now. We are ready for something else. The kids are bigger and we need to live in more than 400 sq. ft. But rents for 2BDR apts start at $1800. Houses of any size start at 2K
Things have been going well for me…I’m almost debt free and I now know that I can put deals together. But I can’t quite see my way to making the kind of mortgage payments that over $350K requires.
What I am I missing? I need to live near here for the next several years because my oldest daughter’s father lives here and the life we have created for her is here. Even if I go 50 miles north or south of here, there is very little under 350K.
Should I bite the bullet and pay the $24-30K in rent each year? That seems so far out. Is there some equity share siutation I should be looking into? (We still have fantastic appreciation here). We don’t really have foreclosures (or tax sales), so I don’t think there is great likeliehood of me taking someone’s property subject-2. Besides, taking a property subject-2 a monthly payment of $3500 doesn’t get me too excited.
Any ideas? I’d appreciate any feedback, no matter how far out. Thanks. Sincerely, Kristine
Re: Looking for a house…for me. - Posted by michaela-ATL
Posted by michaela-ATL on October 22, 2003 at 07:42:27:
Kristine,
congratulations for getting to this point. Nate had a good point: interest rates are so incredibly low, that it’s owrthwhile to take a close look at the different programs out there.
I have a 324K interest-only loan and my P+I pmt is $ 924/mo. It actually went down in August.
Even in high demand areas there are forecosures with people waiting until the last minute. So, even though there may be high demand for housing, a 1-week before foreclosure property can’t normally be sold on the open market. People are in denial until the last moment.
I would say, if you have the funds to catch up one of those loans, you could contact pre-foreclosures nad possibly get a great sub-to deal. If there’s enough equity you could offer the seller some more money 1 year down the road. Then think about refinancing into one of those interest-only libor loans, pay the seller, pull some cash out. The first couple of years you only pay interest anyway, so, you might as well go that route and maybe sell in a couple of years. Take your profit and buy something else.
Just my thoughts
michaela
PS… - Posted by David Krulac
Posted by David Krulac on October 21, 2003 at 19:55:17:
Read “Buy and Hold” by David Schumacher, who did his investing exclusively in LA, Hermosa Beach and Orange County.
i wrote a long, long answer… - Posted by David Krulac
Posted by David Krulac on October 21, 2003 at 19:52:01:
however its lost in some bit bucket in cyberspace. the short answer:
buy at super bargain, sub-wholesale prices and terms.
move
David Krulac
Central Pennsylvania
Re: Looking for a house…for me. - Posted by Anne_ND
Posted by Anne_ND on October 21, 2003 at 16:00:36:
Hey Kristine,
Here’s my take on the situation: when one is dealing with really expensive properties, it often makes more sense to rent than to buy because you can get a nicer home if you rent for (say) $2500/mo than if you bought with a PITI of $2500.
Also, with a 30 year mortgage, the first few years practically the whole payment is interest anyway.
If you need to get out of your living situation now I suggest either buying one of those $100K mobile homes with financing (or- if there are any empty lots - sounds like there aren’t- buy a MH elsewhere for cheap and pay to have it moved to Santa Barbara), or rent a larger place.
Keep doing deals, save up some money and then purchase a house. Consider using private money rather than a bank, or partner with someone who knows of your expertise and share the equity.
Finally, contact Bill Gatten and see if he’s got any PACTrust deals going on in that neck of the woods. The last number I had for him was 800-207-4273. If you want to read up on him, search the archives for ‘woodchuck’. [Now those were the good old days…]
good luck,
Anne
Re: Looking for a house…for me. - Posted by Nate(DC)
Posted by Nate(DC) on October 21, 2003 at 13:29:45:
Kristine,
This isn’t the most “creative” solution ever, but it might work.
I don’t know what your credit situation is, nor do I know how many years “several” is. But if it’s, say, five years, you could try to get a house on a 5/1 ARM or a LIBOR ARM with fixed payment for the first 60 months. If you got a $350,000 loan at, say 2.95% which is where the fixed LIBOR rates are nowadays, your monthly payment would be $1466 plus taxes and insurance (which I’m sure are also insane, since it’s CA), but you could OWN for five years for about what it would cost to rent something, and if the market continues to appreciate as it has, be sitting on a nice chunk of equity then even if you are then forced to sell.
In a market that’s going only one direction, I’d recommend trying to buy something - anything - any way possible - rather than continuing to rent. Gavin made a good point about the structural issues affecting the housing market in CA, which are not going away any time soon. And Santa Barbara will never have a demand issue; it’s just too beautiful. My opinion, anyway.
Good luck,
NT
Re: Looking for a house…for me. - Posted by Gavin Wilkinson
Posted by Gavin Wilkinson on October 21, 2003 at 12:50:13:
I also live in California. I moved east to find cheaper housing, and now the prices in the area I moved to are starting to climb.
Consider a lease option. If you find you cannot make the payments, you can let it go and go back to something smaller without messing up your credit. If prices continue to skyrocket, exercise the option. Then you can either sell it and collect a nice check or get easier financing due to your equity. If you are committed to the area for a long time, you need to get something, because it may get worse, not better. California has a lot of rules that make creating new housing very difficult.
Re: Looking for a house…for me. - Posted by John V, FL
Posted by John V, FL on October 21, 2003 at 11:22:14:
Let me say you are lucky to live in one of the nicest places I’ve ever seen. However housing is so outrageous to be beyond ridiculous these days. I think it has the lowest housing affordability level in California (probably the world…lol) with only 14% able to afford a home there at current prices. If you must live there I beleive you will be able to get some great deals on the inevitable collapse if you can wait a few years and then generate serious equity for the next upswing.
You took my words out of my mouth - Posted by John Smith, IV
Posted by John Smith, IV on October 21, 2003 at 08:28:11:
I’m reading your post and immediately thought about a subject-2 situation. Then I read one of your last sentences!
Sounds like a subject-2 would be one of the things that fits your situation though.
Select the area that you would like to move to, and distribute flyers in the neighborhood once a month for the next 12 months.
Plant the seeds. Water the seeds. Harvest the fruits.
You have a solid foundation if you have been flipping protperties. You might need to do at least 1-2 deals more a year than whatever you are doing now, just to pay YOUR mortgage. But it sounds like you can do it.
Re: Looking for a house…for me. - Posted by dimpil
Posted by dimpil on October 21, 2003 at 07:53:55:
Why not apply the same thinking you do when purchasing homes? Even the upscale markets have issues and go into foclourse or get behind on payments, hubby and wify split and one can’t make the lifesytle work without the others income.
Don’t think because it looks good on the outside and in a high rent district you can’t find a deal.
I found the our new home for 289,900 and it appraises for $400,000. The pervious owner was a businessman who’s company when belly up.
Another thing I found is, if there are new developments you can get a great price if your like #1 or 2 in becaue the builder is usally wanting to attract people and will cut a great deal on the first few. Same holds true for the last 1 or 2 units in the developement. When they only have 1 or 2 left they want to get their money and go, the agent on duty is tired of being on duty and will just give the home away.
I found my ex hubby a home appraised for 175,000, purchased for 140,000 because the agent wanted to leave the development and only had 3 homes left.
Another example is this. We have a really upscale neighborhood in development in my area. 1 million dollar homes and up and the developer had some builders build on spec. 4 years later 3 spec homes are still there and families have built other homes around them and there are just about 35 lots still vacant. Now I’m sure those builders want to sell those homes and give a steep discount and get them off their working line of credit with the bank.
I think it’s all worth checking into. Even running a small ad in the paper, will buy home or do lease with option to purchase.
What do you have to lose?
Re: Looking for a house…for me. - Posted by TH
Posted by TH on October 21, 2003 at 07:47:49:
Kristine:
I wish I could help you but I can’t. You see I live in an area where I just bought an REO for 15,000 and it is a 3 bedrooms 1 bath, 2 car garage, built in 1978 and has a beautiful full walled fireplace. I was wondering if we did the right thing in our purchase and now when I compare it to the figures you have printed it’s a no brainer! We will easily flip for 15-20k profit after all repairs. I wish you luck in finding your dream home. I was just wondering if you purchased REO’s or held rentals for a time before you became debt free? We are where you were some time ago and have elected to flip some houses to pay off debt… TIA
TH
You took my words out of my mouth - Posted by John Smith, IV
Posted by John Smith, IV on October 21, 2003 at 07:36:21:
I’m reading your post and immediately thought about a subject-2 situation. Then I read one of your last sentences!
Sounds like a subject-2 would be one of the things that fits your situation though.
Select the area that you would like to move to, and distribute flyers in the neighborhood once a month for the next 12 months.
Plant the seeds. Water the seeds. Harvest the fruits.
You have a solid foundation if you have been flipping protperties. You might need to do at least 1-2 deals more a year than whatever you are doing now, just to pay YOUR mortgage. But it sounds like you can do it.
Re: Looking for a house…for me. - Posted by Brent_IL
Posted by Brent_IL on October 22, 2003 at 06:21:37:
I had forgotten abot the “Woodchuck” thread. Re-reading it brightened my whole week. Thanks, Anne.